Every vehicle owner in Malaysia has to purchase a minimal amount of insurance for their vehicle. It is illegal not to have coverage for your modes of transport. Without car insurance, you can’t renew your road tax for your car, and you can’t claim for the loss or damage to your vehicle.

Beyond the basic coverage, there is add-ons insurance that car owners can consider purchasing. Buying more insurance means getting more coverage, thus further protecting you and your vehicle from additional risks such as theft or windshield damage.

However, how much insurance does a car need? When does it become over-insured? Is it worth being under-insured when you can save money?

Types of insurance

First of all, there are different types of add-on insurances car owners can buy. Each owner has their own needs for their cars. Thus it is essential to do some research before purchasing.

Basic car insurance provides coverage when your car gets involved in an accident, but does not cover windshield damage or theft of car accessories. Other add-ons include the Special Perils Cover which covers your vehicle against natural disasters such as sinkholes and the All Driver Coverage which extends your cover for other drivers that might use your car.

car insurance AIGDangers of being under-insured

It’s understandable if you want to save up money, but the point of having car insurances is to protect you and your finances in the long run.

You can tell how much insurance you need by calculating the assets you have. If you don’t own an expensive car, you’ll probably be fine with minimum coverage. However, you can consider a broader coverage if you have a house or investments.

Having your car under-insured is probably something you will regret in the event of an accident, especially in an accident that you caused.

Over-insuring has its risks

It is wise to prepare for the worst, but that does not mean you need all the car insurances in the world.

To prevent over-insuring, measure your vehicle’s market value. If your coverage is higher than your car’s market value, the maximum compensation will not be the amount you insured, but the actual cost of the vehicle.

It’s fantastic to have higher coverage, but it might not be worth it if it burns a hole in your wallet.


There’s no definite answer to how much car insurance you need. It all depends on your need. Figure out what is the necessary coverage for your vehicle, do plenty of planning and research!

If you need to renew your car insurance, make a claim or contact an agent, visit https://www.aig.my/personal/auto-insurance now!